Correlation Between Funko and Wayfair

Can any of the company-specific risk be diversified away by investing in both Funko and Wayfair at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Funko and Wayfair into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Funko Inc and Wayfair, you can compare the effects of market volatilities on Funko and Wayfair and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Funko with a short position of Wayfair. Check out your portfolio center. Please also check ongoing floating volatility patterns of Funko and Wayfair.

Diversification Opportunities for Funko and Wayfair

0.87

Correlation Coefficient

Funko  Wayfair

Very poor diversification

The 3 months correlation between Funko and Wayfair is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Funko Inc and Wayfair in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wayfair and Funko is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Funko Inc are associated (or correlated) with Wayfair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wayfair has no effect on the direction of Funko i.e., Funko and Wayfair go up and down completely randomly.

Pair Corralation between Funko and Wayfair

Given the investment horizon of 90 days Funko Inc is expected to under-perform the Wayfair. But the stock apears to be less risky and, when comparing its historical volatility, Funko Inc is 1.25 times less risky than Wayfair. The stock trades about -0.28 of its potential returns per unit of risk. The Wayfair is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  4,375  in Wayfair on December 27, 2024 and sell it today you would lose (674.00) from holding Wayfair or give up 15.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Funko Inc  vs.  Wayfair

Funko Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Funko Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's forward-looking signals remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Wayfair

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wayfair has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Funko and Wayfair

The main advantage of trading using opposite Funko and Wayfair positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Funko position performs unexpectedly, Wayfair can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Wayfair will offset losses from the drop in Wayfair's long position.

The idea behind Funko Inc and Wayfair pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Content Syndication module to quickly integrate customizable finance content to your own investment portal.